Banking & Finance

UnionPay charts new course into Europe as President Xi witnesses its partnership with Portuguese bank BCP

  • Millennium BCP, Portugal’s biggest listed lender, is 27 per cent owned by mainland China conglomerate Fosun International
  • Companies including Huawei also expected at signing ceremony where a clutch of deals will be signed
PUBLISHED : Wednesday, 05 December, 2018, 8:30am
UPDATED : Wednesday, 05 December, 2018, 2:27pm

China UnionPay, the world’s largest issuer of bank cards, will on Wednesday take a concrete step towards tapping the European market through a tie-up with Millennium BCP, Portugal’s biggest listed lender, as a trade war with the United States drives Chinese financial institutions to look to Europe for growth.

UnionPay, also mainland China’s dominant bank card clearing service, is expected to sign a pact with the Portuguese lender, which will be witnessed by Chinese President Xi Jinping, who is on a state visit to the European country.

China’s UnionPay plans global expansion of QR code e-payments in battle with Alipay and Tenpay

The signing will enable UnionPay to accelerate its expansion across the globe, with BCP becoming the first European bank to issue bank and credit cards using the Chinese company’s electronic payments clearing system, according to two people with knowledge of the deal.

UnionPay would not comment on the signing.

The partnership between UnionPay and BCP, which is 27 per cent owned by mainland China conglomerate Fosun International, is expected to lead to more Chinese financial institutions flocking to European Union countries such as Spain and Portugal for growth opportunities.

“A first European Union member to issue UnionPay cards is of great significance to the Chinese clearing company amid its internationalisation campaign,” said Ding Haifeng, a consultant with Shanghai-based Integrity Financial Consulting. “Europe appears to be the primary choice for Chinese institutions to expand abroad as they grapple with barriers in the US.”

UnionPay has issued more than 100 million cards outside mainland China, which can be used in the company’s overseas network that covers more than 23 million merchants in 170 markets.

The US-China trade war has led to concerns about Beijing’s “go global” drive, but the Chinese leadership has been working to promote a global mutual opening up as a way of opposing protectionist and unilateral approaches to trade and investment.

China is now the EU’s second-biggest trading partner, behind only the US and the EU is China’s biggest trading partner.

According to sources, a clutch of deals will be signed on Wednesday in Lisbon, and mainland China companies including Huawei Technologies are expected to participate in the ceremony. State Grid Corporation of China, the state-owned electricity monopoly that has a 25 per cent stake in Portugal’s national power grid operator, Redes Energéticas Nacionais, will also be present.

Huawei and State Grid were unavailable for comment on Tuesday.

Altice Portugal, the country’s largest telecoms operator, is working with Huawei to develop and roll out next-generation 5G networks in Portugal.

The UnionPay-BCP partnership will also bode well for Fosun, which was among a quartet of companies under scrutiny in Beijing for overseas acquisitions about a year ago.

Fosun to use Portuguese-speaking markets as test beds for integrated businesses

Guo Guangchang, founder and chairman of Fosun, said in a WeChat Post that he was in Lisbon and would attend the welcome dinner that President Marcelo Rebelo de Sousa was throwing for President Xi on Tuesday.

“As a representative of a Chinese enterprise, I was invited to join the welcome dinner,” said Guo.

Fosun’s acquisitions in Portugal began in 2014, with a 1.04 billion (US$1.14 billion) takeover of the country’s largest insurer, Fidelidade Cia de Seguros, followed by the purchase the same year of hospital operator Espirito Santo Saude SGPS.

Fosun first bought a 16.7 per cent stake in BCP in 2016, and raised its holding to 27 per cent in 2017, making it the single largest shareholder in the private bank.

Additional reporting by Peggy Sito